5 pharmacare questions and answers

The federal government's announcement in the budget of an advisory council on options to proceed with a national pharmacare program leaves many questions about how it could work. Here are some answers.

Where Canada is when it comes to universal drug coverage

Mike Hannalah, a pharmacist at Smith's Pharmacy in north Toronto says the province's new pharamcare plan for young people doesn't go far enough. (Mike Smee/CBC News)

The federal government's announcement in the budget of an advisory council on options to proceed with a national pharmacare program leaves many questions about how it could work. Here are some answers.

What is pharmacare?

Canada's health care system covers visits to the doctor and medically necessary hospital care. Once someone goes to fill a prescription, universal public health insurance ends for many Canadians. Pharmacare or universal health care aims to fill the gaps to improve access to prescription drugs .

Every developed country in the world that has a universal health-care system also has universal drug coverage, except Canada.

Including pharmacare in Canada's comprehensive health insurance system was discussed as far back as the 1940s. But in 1964, the Hall Commission that led to public health care recommended implementing national pharmacare after hospital and medical care, which at the time were bigger components of healthcare and the related costs.

Where's the need?

It's estimated about 700,000 Canadians skip purchases of food to pay for prescription medications and upwards of 240,000 skimp on heat to pay for drugs, said Dr. Danyaal Raza, chair of Canadian Doctors for Medicare in Toronto.

Raza said his patients are the working poor who work part-time in precarious jobs and don't qualify for a public plan.

Is pharmacare affordable?

Pharmaceuticals cost Canadians an estimated $28.5 billion in 2015, a recent federal report suggested. Public insurance and private insurance paid for the bulk with the rest borne by individuals out-of-pocket.

But pharmacare offers a chance to save through better bargaining power from a national insurer, experts say.

The savings would come from securing better prices for prescription medications by negotiating more effectively compared with the current patchwork of public and private plans trying to do so on their own, said Jamie Daw, a Canadian PhD candidate in health policy at Harvard University in Cambridge, Mass.

"The paradox is that you know we can't get drug costs down without … getting smarter about negotiating on prices. And one of the ways that we can do that is by covering the entire population and then having a higher purchasing power to secure ...the prices that will put us more on par with comparable countries," Daw said in an interview.

(Parliamentary Budget Officer)

There are other benefits.

"It is possible to have a universal program to cover 80 per cent of drugs for everyone that will save money overall and that could be a real benefit," said Aidan Hollis, a professor of economics at the University of Calgary who studies pharmaceutical markets.

In 2017, when the Parlimentary Budget Officer estimated how much would be saved on prescriptions if Canadians were covered by these cheaper provincial drug plans, he concluded it would be $4.2 billion annually. That doesn't include the cost to government of extending insurance coverage to everyone.

Universal health care usually includes prescription drugs -- but not in Canada. 2:44

What would be covered?

Not everything would be covered.

Currently, public drug plans decide what to cover and what not to, as do public plans in other countries.

For instance, the Canadian Agency for Drugs and Technologies in Health or CADTH, an independent national organization, makes recommendations to provincial plans to guide those decisions. The agency evaluates new drugs based on factors such as affordability and whether the drug is more effective than existing options.

Under the Pan Canadian Pharmaceutical Alliance, the provinces have come together to reduce the cost of drugs, but that's only for people who are already covered, Raza said.

"We can do a lot of learning from what's worked and what hasn't worked in other countries and we actually may be able to use that as an advantage as we are coming in so late to the process to try to pick up best practices used in other countries," Daw said.

Pharmacare isn't going to solve every pharmaceutical drug problem, Hollis cautioned. "There still going to be deep problems about how to deal with really expensive drugs."

Why now?

Some provinces are moving forward with aspects of pharmacare, but it's been incremental, Raza said.

Last month for instance, Canada's generic drug industry agreed to cut prices 25 per cent to 40 per cent for everyone in provincial/public drug plans, in exchange for suspending open tenders for five years.

In June 2017, Quebec's health minister announced an agreement to reduce how much the province spends each year on drugs by 40 per cent, a decrease of more than $300 million annually, through a deal with generic drug suppliers.

In Ontario, the OHIP+ plan now covers prescriptions for those aged 24 and younger.

Further back, Saskatchewan had a universal, comprehensive drug benefit from 1975 through 1987.

"Perhaps the federal government is interested in moving forward on what would be really sort of a legacy policy," said Daw. "If they actually are successful in implementing national pharmacare …that's the most significant sort of change to the health care system that has happened in decades."

Daw said the United Kingdom is a leader in evaluating medicines to cover under pharmacare, and Australia and New Zealand have similar systems.